Order up! GrubHub shares soar

Stock in food ordering service jumps 31 percent in first day of trading

April 05, 2014|By Jessica Wohl, Tribune reporter

GrubHub CEO Matt Maloney takes a selfie before ringing the opening bell at the New York Stock Exchange as company shares began selling Friday. (Lucas Jackson/REUTERS)

Investors filled up on shares of GrubHub in the company's first day of trading.

Shares of GrubHub rose as high as $40.80 on Friday and ended the trading day up 31 percent, at $34. GrubHub's gains came as the overall stock market fell, with the Dow Jones industrial average, the S&P 500 and the Nasdaq composite index all posting declines.

At $34 per share, the Chicago-based online food ordering service is worth about $2.67 billion, or about half as much as Groupon, the Chicago-based daily deals company. Groupon's shares have tumbled since their 2011 debut, when they also soared 31 percent in their first day of trading.

GrubHub coordinates takeout and delivery orders for thousands of independent restaurants. Now, with the proceeds from its IPO, GrubHub needs to prove that it has the long-term growth that investors crave.

GrubHub executives and food-delivery mascots visited the New York Stock Exchange for Friday's debut. People dressed as a slice of pepperoni pizza and as a piece of sushi posed for pictures. GrubHub even presented its services to Wall Street with a person donning a costume of a plastic takeout bag featuring its GrubHub and Seamless logos.

CEO and co-founder Matt Maloney said GrubHub will try to grab a bigger portion of the estimated $67 billion Americans spend annually on pickup and delivery from independent restaurants. More and more of that spending is moving online, "and we've seen it for the past few years in our growth numbers," Maloney said. GrubHub aims to introduce new products that drive more diners to use its services.

GrubHub's 31 percent first-day gain surpassed the average 18 percent gains for U.S. IPOs so far this year, according to Dealogic. Still, such soaring prices are far from the big jumps seen in 2000, when the average one-day pop was 53 percent.

The appetite for GrubHub was apparent earlier in the week, as the company set its initial public offering price at $26 per share after raising the range to $23 to $25 from a prior target of $20 to $22 per share. Investors also sold more shares than they planned.

GrubHub's IPO followed the company's merger with New York-based rival Seamless in August.

At $26 per share, GrubHub's offering raised about $193 million for the company and selling shareholders.